Loyalty points have always been seen as a win-win. Retailers perpetually achieve customer loyalty by having customers accrue points in their store, which they can then use to spend on rewards and benefit. Research shows that creating a tailored and innovative loyalty programme is the best way to meet and exceed customer expectations and inspire long-term loyalty, and with around 58%of internet users believing that earning rewards/loyalty points is one of the most valued aspects of the shopping experience, it’s clear that a loyalty programme should be a key part of any brand’s business model. Making severe changes the loyalty programme model after a long time could therefore prove to be detrimental.
Morrisons recently announced they are getting rid of their ‘Morrisons More’ loyalty card programme in favour of their new digital ‘MyMorrisons’ app, forcing many of their customers to spend all of the points they have been building up for many years before the app comes into effect, or else face losing them altogether. Whilst moving to a digital platform in favour of physical card is superior in many ways, especially when it comes to reducing plastic usage, longstanding customers could feel somewhat forgotten and underwhelmed as the points they have accrued over many years, perhaps building up for some sizeable discounts, will now effectively be rendered obsolete. You would expect being the fourth largest store in the UK would definitely help Morrisons minimise any sort of loss to its customer base despite dropping this sudden bomb, but the same cannot be said for other smaller retailers who may wish to update their loyalty system and follow suit.
Over the years, traditional loyalty programmes have suffered from a lack of customer-centricity or innovation. Consumers would save up points, often over the course of many years, only to be offered something of little value in return, or in the case of some grocers, a limited cash-back option offering minor incentive for customers to save up points in the first place. Building up points from regular shopping trips for multiple years, only to be given £2 off your next shop, isn’t really all that appealing and it’s therefore no wonder that many people’s loyalty points go unused. What retailers should therefore focus on within their loyalty programmes is an approach, whereby customers easily accrue loyalty points which can then be redeemed for ‘free’ products, promotions and experiences, rather than traditional cashback systems. These experiences and promotions help drive customer engagement and provide many more options for the consumer, allowing them to choose what to use their points on.
Technology has helped in many ways with this evolving loyalty system model. Having an app which allows the customer to clearly see the points they have, what they can get with them and how much further they must save until they can get the next big-ticket item or discount, is a great way of having the customer be a part of the entire loyalty experience and journey, while also making the system more tailored to the individual. Furthermore, having an app which constantly logs customer data allows the retailer to see trends, shopping habits and much more, all of which is useful information for any business looking to improve customer engagement and buying & range decisions to improve customer experience.
However, putting in place a brand-new loyalty system – like an app – at the expense of the customer’s existing loyalty points history alienates the very people who have been loyal to the retailer for a long time. Having an approach to loyalty where customers only receive offers, promotions & discounts based on their individual shopping style, while a good idea in theory, could change customer habits for the worse and cause customers to only buy items when on promotion which in parallel reduced the value perception of the brand. Limited time discounts on specific items could also encourage customers to buy items they don’t currently want or need, contributing to waste and carbon footprint.
To bring out the best of a loyalty programme, retailers should pick and choose the best parts of the whole system that fit with their value proposition and customer groups. This means the best thing a retailer can do for their loyalty model is to have a solution which provides the best possible customer engagement aligned to who the customer is. This solution can in turn provide suggested tailored items, discounts, and experiences for individual customers, while also giving them the freedom to spend rewards wherever they like. The key word here is ‘choice’. Providing maximum choice for the customer helps them to build emotional connections and experiences between brands and customers and ensures that the customer will return to the brand in the future.
To take it one step further for the best possible loyalty offering, retailers should allow for points to be used across different industries other than just within their own stores or website, providing the ultimate level of choice for the consumer. 33.1% of people found that rewards within loyalty programmes were uninteresting; therefore, having an integrated app, where customer can see all the points they have accrued over the years for the variety of retailers they shop with, while also being able to use their points across all these different brands would give the consumer all the choices they could ever need and help retain a strong level of loyalty.
In the end, Morrisons’ move to a digital app-based loyalty programme will likely help them in many ways in the long run, but this comes at the expense of established customers losing their points. A better way for retailers to upgrade their loyalty programmes would therefore be to keep already-loyal customers front-of-mind throughout the process, ensuring that no one is losing out as a result of this industry shift. Perhaps the answer is a solution whereby customers can win back their expired points through a user interface or gamification.
Pete Howroyd, founder and CEO of Swapi